Tag Archives: greece
If it’s 2008 redux, there is one big difference. It’s Summer not Fall.
Posted on 12. Jun, 2012 by Harvey Sax.
Everyone is nervous about Europe. Me too. I have no way of knowing how much of this is already priced in the market. You’d have to say a lot based on the violent reaction in the oil patch, some European markets but I don’t see any positive outcome from this weekend vote in Greece. If they vote to keep the austerity demands in place, brief rally and the market will soon say the economy is just going to at best muddle along and at worse, be right back at the bread line. On the other hand if they abandon austerity, there is likely to be some kind of Euro shock although it could be brief followed by a very sharp rally if Germany agrees to tighter fiscal ties. From what I can gather the Germans are done with the Greeks and might be willing to be more cooperative with the ECB if they’re gone. A lot of what ifs and no way for me to have any edge. If it’s 2008 redux, there is one big difference. It’s Summer not Fall.
Spain IS Greece After All: Here Are The Main Outstanding Items Following The Spanish Bailout | ZeroHedge
Posted on 09. Jun, 2012 by Harvey Sax.
Spain IS Greece After All: Here Are The Main Outstanding Items Following The Spanish Bailout
Submitted by Tyler Durden on 06/09/2012 14:52 -0400
Bank Run Bond Bridgewater CDS Creditors European Central Bank Eurozone Germany Greece Gross Domestic Product Ireland Italy National Debt Nationalization Portugal Sovereign Debt
After two years of denials, we finally have the right answer: Spain IS Greece. Only much bigger. So now that the European bailout has moved from Greece, Ireland and Portugal on to the big one, Spain, here are the key outstanding questions.
Euro like a bad marriage that’s too expensive to leave
Posted on 05. Jun, 2012 by Harvey Sax.
I’ve been struggling with a metaphor to describe the state of affairs in Europe. I’ve got it now. It’s a bad marriage . All parties now realize they’d be better off ending it except they can’t afford the divorce. At some point, my guess is that Germany answers the question, “Why are euro divorces so expensive? Because they’re worth it.” or do they just learn to live together and make the best of it. I don’t know the German psyche well enough to answer that one. Perhaps one of our readers will hazard a guess?
Soros says Europe has three months to avoid catastrophe
Posted on 03. Jun, 2012 by Harvey Sax.
I don’t pretend to know what’s going to happen but I’ve said many times, the world would be much better off without the euro. For reasons beyond my comprehension, the Europeans seem hell bent on keeping it. Perhaps this speech from George Soros will make it clearer to you.
Remarks at the Festival of Economics, Trento Italy June 2nd
European Banks Unprepared for Greek Exit From Euro – Yahoo! Finance
Posted on 23. May, 2012 by Harvey Sax.
European Banks Unprepared for Greek Exit From EuroBy Elena Logutenkova, Liam Vaughan and Gavin Finch | Bloomberg – 1 hour 27 minutes ago
Europe’s banks, sitting on $1.19
trillion of debt to Spain, Portugal, Italy and Ireland, are
facing a wave of losses if Greece abandons the euro.
While lenders have increased capital buffers, written down
Greek bonds and used central-bank loans to help refinance units
in southern Europe, they remain vulnerable to the contagion that
might follow a withdrawal, investors say. Even with more than
two years of preparation, banks still are at risk of deposit
flight and rising defaults in other indebted euro nations.
via European Banks Unprepared for Greek Exit From Euro – Yahoo! Finance.
Apple to Top Spain, Greece, Portugal: Chart of the Day – Bloomberg
Posted on 12. Apr, 2012 by Wilensky.
Not much needs to be said here. Apple makes more money than three european countries combined ($33 bil in earnings vs $32 bil in earnings for Europe). Its valuation is more than three european countries combined. How big can Apple get?
Apple to Top Spain, Greece, Portugal: Chart of the Day – Bloomberg.
Greece A Result Of A Greedy Goldman? Nahhhh…
Posted on 06. Mar, 2012 by Wilensky.
Back in 2001, Greece had a problem. The struggling country’s debt levels were simply too high to qualify for admittance to the European Union. While these regulations were in place to protect the structure of the European economy, Goldman Sachs was more than willing to step in with a timely loan which provided the necessary liquidity to hide the nation’s accumulated debt load. Essentially a perfect solution for both Greece and Goldman, here is the situation illustrated by Bloomberg:
“The Goldman Sachs transaction swapped debt issued by Greece in dollars and yen for euros using an historical exchange rate, a mechanism that implied a reduction in debt, Sardelis said. It also used an off-market interest-rate swap to repay the loan. Those swaps allow counterparties to exchange two forms of interest payment, such as fixed or floating rates, referenced to a notional amount of debt.
The trading costs on the swap rose because the deal had a notional value of more than 15 billion euros, more than the amount of the loan itself, said a former Greek official with knowledge of the transaction who asked not to be identified because the pricing was private. The size and complexity of the deal meant that Goldman Sachs charged proportionately higher trading fees than for deals of a more standard size and structure, he said.”
Now any seasoned investor knows that when something is too complex to fully understand, chances are you should walk away. And when the other side of the trade demands that you accept the terms without shopping the price around, you definitely walk away. However, the hands of Greece’s Debt Chief were tied by Goldman’s conditions:
“Sardelis couldn’t actually do what every debt manager should do when offered something, which is go to the market to check the price,” said Papanicolaou, who retired in 2010. “He didn’t do that because he was told by Goldman that if he did that, the deal is off.”
Again, this should have been another indicator that Greece was heading into dark waters. Yet greed overcame caution and both parties came to an agreement with a complex structure that exchanged Greek issued debt (in dollars and yen) for euros. Using and off-market interest rate swap to repay the principal, this exchange suggested that the overall load would be reduced. However, “those swaps allow counterparties to exchange two forms of interest payment, such as fixed or floating rates, referenced to a notional amount of debt.” As a result, the trading costs of the deal skyrocketed to more than the total value of the loan itself, allowing Goldman to increasingly charge higher trading fees as the value rose.
If you have a hard time following the intricacies of the loan, that’s the point. It took Greece’s Debt Chief over three months to realize the terms of the loan weren’t nearly as attractive as first believed. How could this happen on such a large scale you ask? Derivatives expert Satyajit Das has a simple explanation, “Like the municipalities, Greece is just another example of a poorly governed client that got taken apart… These trades are structured not to be unwound, and Goldman is ruthless about ensuring that its interests aren’t compromised — it’s part of the DNA of that organization.”
A “sexy story between two sinners” indeed.
Greek Debt Swap Success? IIF’s Dallara Seems To Think So
Posted on 04. Mar, 2012 by Wilensky.
Greece has fallen out of the headlines in the past few days due to a supposed resolution of the debt deal, but large hurdles still exist. Managing Director Dallara of the IFF is under the impression that the current plan will be proved a success next week with investors exchanging their current bonds for a 53.5% haircut. However the success of this exchange requires a 90% participation rate which is a tall order for many of the hedge funds holding Greek debt. If participation can be raised above 75% but under 90% then Greece will bring the issue to their public sector creditors.
“with investors that momentum is building,” Charles Dallara, managing director of the International Institute of Finance (IIF), told Greece’s Antenna television in an interview. “I’m quite optimistic that the participation levels will be quite high,” he said, but he declined to predict a figure.
IIF’s Dallara says confident Greek debt swap will succeed | Reuters.
Greece Steps Down And North Korea Takes The Stage
Posted on 27. Feb, 2012 by Wilensky.
Interactions with North Korea are a bit of an unknown under the new leadership of Kim Jong Un, but the fourth largest military in the world is stepping into the limelight as Greece leaves center stage. Annual joint military drills between the US and South Korea take place this week and North Korea isn’t happy. This could spell trouble should the young dictator with something to prove back himself into a corner..
“The war drills are an unpardonable infringement upon the sovereignty and dignity” of North Korea, the official Korean Central News Agency said today in an editorial. “The army and people of the DPRK are fully ready to fight a war,” the editorial said, referring to the country’s official name, the Democratic People’s Republic of Korea. The comments came two days after new North Korean leader Kim Jong Un ordered his military, the world’s fourth-biggest, to “make a powerful retaliatory strike” if the country’s territory is violated. The “Key Resolve” exercises that began today include 2,100 American personnel and will last until March 9, U.S. military spokesman Kim Yong Kyu said by phone.”
via U.S. Starts Drills With S. Korea as North Warns of Confrontation – Businessweek.
Paulson Calling For A Greek Default
Posted on 15. Feb, 2012 by Wilensky.
According to Paulson & Co., a hard default by Greece could spell economic disaster of unprecedented proportion along with the breakup of the Euro. In his 2011 recap letter to clients, he estimates $117 billion will be needed to recapitalize banks and satisfy other monetary needs.
Paulson & Co.:
“We believe a Greek payment default could be a greater shock to the system than Lehman’s failure, immediately causing global economies to contract and markets to decline,” the hedge fund said in the letter, a copy of which was obtained by Bloomberg News. The euro is “structurally flawed and will likely eventually unravel… …It seems likely that the pressure to keep the euro together becomes too great and it ultimately falls apart.”
While the firm identified the largest threat as being the overexposure of European banks who simply lack the equity to handle a crisis, they’ve had rough luck predicting the financial sector in the not-so-distant past. 2011 halved the fund’s assets, primarily due to a large stake in Bank of America and the fund sold out of their position sometime last quarter. BAC has rallied close to 50% since.
via John Paulson Says Greece May Default, Spurring Euro Breakup – BusinessWeek.
Greece: 20% Cut in Minimum Wage and 15,000 Public Sector Jobs Lost? Ouch..
Posted on 08. Feb, 2012 by Wilensky.
Prime Minister Papademos, Finance Minister Venizelos, and Greek Bank Governor Provopoulos are expected to sign a draft agreement to secure a $172 billion dollar rescue plan desperately needed by the insolvent country. However a couple of stipulations in the document are sure to create backlash, specifically the large cut to the minimum wage and the loss of 15,000 public sector jobs.
From Businessweek:
Greece will pledge permanent spending cuts, including lower pension payments and a 20 percent reduction in the minimum wage, as the economy contracts this year at a faster pace than originally estimated, according to the draft of a new financing deal with the European Union and International Monetary Fund.
“To restore competitiveness and growth, we will accelerate implementation of deep structural reforms in the labor, product and service markets,” according to the letter of intent addressed to IMF Managing Director Christine Lagarde in a document obtained by Bloomberg News.
The reforms outlined in the draft, which include trimming state wages, cutting 15,000 public sector employees this year and merging all auxiliary pension funds, will help Greece return to growth in the first half of next year, according to the document.
At least tomorrow’s “Angry Street Parade of Violence” should proceed on schedule…
via Greece to Pledge 20% Cut in Minimum Wage, Draft Accord Shows – Businessweek.
France Said to Seek Faster Start to EU Iran Oil Embargo
Posted on 17. Jan, 2012 by Wilensky.
Oil markets see a bit of a boost from France’s push toward cutting the grace period before implementing a ban on Iranian crude in half, breaking a 4 day loosing streak.
Jan. 17 (Bloomberg) — France is pushing for faster enforcement of the European Union’s proposed ban on oil imports from Iran, two officials with knowledge of the matter said.
France wants the embargo to be delayed by no more than three months to allow nations including Greece, Italy and Spain to find alternative supplies, according to a French government official, who declined to be identified, citing state rules. While France is seeking a shorter exemption for existing crude purchase contracts, a six-month delay favored by more EU nations remains the more likely compromise, said the second person, an EU diplomat, who also asked not to be identified because the talks are confidential. Both officials spoke yesterday.
EU foreign ministers are scheduled to decide on the ban, which will probably also include an exemption for Eni SpA, Italy’s biggest oil company, at a Jan. 23 meeting. The embargo requires unanimity among the bloc’s 27 states. Iranian officials have threatened to block the Strait of Hormuz, through which almost 20 percent of the world’s oil flows, if exports are curbed.
via France Said to Seek Faster Start to EU Iran Oil Embargo – Businessweek.
Finacial Reform in Greece
Posted on 03. Aug, 2011 by Live Trading News.
Speaking before Parliament’s plenary session, Finance Minister Evangelos Venizelos referred to the finance ministry’s draft bill stressing that “the scenery should change” and underlined that “this transitional period will have to be managed with prudence, professionalism, caution, consensus and a sense of responsibility.”
“The months of August and September should be exemplary in terms of swiftness,” he said, responding to criticism by opposition parties regarding the procedures followed.
“We are caught in an worldwide vortex and we have to utilise the opportunities created by us for us. We should be reliable as regards our obligations towards our lenders and meet our commitments,” he stressed.
The finance ministry’s draft bill will allow the government to show its creditors that there is progress on August 22, he pointed out and explained that the supplementary tax regulations will boost revenues and provide tools in the battle against tax evasion and black market. He stressed that important structural reforms are being prepared for months and they will have be passed into laws.
Venizelos also promised new regulations focusing on the financially vulnerable, bank liquidity and bank guarantee notes.
Responding to a relevant question by opposition Popular Orthodox Rally (Laos) leader George Karatzaferis, the minister of finance said that “there is no issue as regards the financing and liquidity of the Greek banks or their capital adequacy.”
Shayne Heffernan
Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.
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